Possible Federal Tax Change Worries Some Lawyers – Robert P. Maloney Quoted in Boston Business Journal

Congress is considering proposed legislation that would require professional services firms with gross revenue of more than $10 million to change how they report and pay their taxes. Currently, most firms pay taxes from the revenue actually received in a given year – known as the cash method of accounting. The proposed legislation would require firms to pay taxes on the amounts billed, even if those bills were not paid in that calendar year. In fact, firms would be liable for the tax payments whether or not that revenue was ever collected.

Robert P. Maloney, Chair of Prince Lobel’s Corporate Practice Group, stated that “the proposed changes may create enough uncertainty to discourage some attorneys from wanting to become equity partners in firms larger than $10 million.” He added that the change would not be “a death knell for the industry. It would change any law firm, but I don’t necessarily think it would hurt us. Within a short period of time, we’d figure out how it works and how to compensate people.”